In January 2018, the Office of the Associate Attorney General issued a new policy that prohibits the Department of Justice (DOJ) from using its civil enforcement authority to convert agency guidance documents into binding rules. This policy prohibits DOJ’s civil litigators from using “guidance documents” in the enforcement of affirmative civil cases (ACE). This includes the False Claims Act (FCA). The memorandum applies to future ACE actions brought by the DOJ and, “whenever practicable,” pending cases.
Brand’s January 2018 Memorandum
When announcing the policy, Associate Attorney General Rachel Bland emphasized that “[a]lthough guidance documents can be helpful in educating the public about already existing law, they do not have the binding force or effect of law and should not be used as a substitute for rulemaking…. Consistent with our duty to uphold the rule of law with fair notice and due process, this policy helps restore the appropriate role of guidance documents and avoids rulemaking by enforcement.”
According to the memo, guidance documents cannot create binding requirements that do not already exist by statute or regulation. Moreover, the DOJ “may not use its enforcement authority to effectively convert agency guidance documents into binding rules… [or] use noncompliance with guidance documents as a basis for proving violations of applicable law in ACE cases.” However, the DOJ may continue to use evidence (1) that a party read an agency document explaining certain statutory provisions as a basis for proving knowledge of the provision, or (2) to explain or paraphrase legal mandates from existing statutes or regulations.
Sessions’ November 2017 Memo
This policy builds on Attorney General Jeff Sessions November 2017 memorandum prohibiting the DOJ from issuing guidance documents that have the effect of adopting new regulatory requirements or amending the law binding on persons or entities outside the Executive Branch. Sessions’ memorandum prevents the DOJ from evading required rulemaking processes by using guidance memos to create de facto regulations. According to a DOJ press release, “[i]n the past, the Department of Justice and other agencies had blurred the distinction between regulations and guidance documents.”
Sessions’ Memorandum states that to avoid circumventing the rulemaking process, the Department’s Components should adhere to the following principles when issuing guidance documents:
- Guidance documents should identify themselves as guidance, disclaim any force or effect of law, and avoid language suggesting that the public has obligations that go beyond those set forth in the applicable statutes or legislative rules.
- Guidance documents should clearly state that they are not final agency actions, have no legally binding effect on persons or entities outside the federal government, and may be rescinded or modified in the Department’s complete discretion.
- Guidance documents should not be used to coerce persons or entities outside the federal government into taking or refraining from taking any action beyond what is required by the terms of the applicable statute or regulation.
- Guidance documents should not use mandatory language such as “shall,” “must,” “required,” or “requirement” to direct parties outside the federal government to take or not take action, except when restating – with citations to statutes, regulations, or binding judicial precedent – clear mandates contained in a statute or regulation. In all cases, guidance documents should clearly identify the underlying law that they are explaining.
- To the extent guidance documents set out voluntary standards (e.g., recommended practices), they should clearly state that compliance with those standards is voluntary and that noncompliance will not, by itself, result in any enforcement action.
The Brand Memorandum will likely have a significant effect on ACE cases and particularly FCA matters. Recently, whistleblowers, who are sometimes joined by the DOJ, have filed FCA cases relying on a violation of a standard. Based on this practitioner’s experience, there have been many healthcare FCA actions based upon sub-regulatory guidance issued by the Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS), its contractors, the Office of Inspector General (HHS-OIG), and the Food and Drug Administration (FDA). This guidance has included preamble commentary, Medicare, Medicaid and other manuals, bulletins, fraud alerts, policy guidance, advisory opinions, and national and local coverage determinations.
This policy applies to the DOJ only and does not prevent a whistleblower from going forward with a FCA case in which the government does not intervene. However, it will be interesting to see whether the government is more aggressive in moving for dismissal of non-intervened FCA based on another recent DOJ FCA policy issued in 2018. There is a discussion of this policy at my blog at https://wirskyelawfirm.com/doj-announces-fca-policy-on-dismissal-of-actions/.
Also, while the Brand Memorandum does not explicitly apply to criminal actions, its principals can certainly be used by defense attorneys in negotiations with the DOJ. If a guidance document is insufficient as a basis to impose a civil monetary penalty, it certainly should not be the basis of a criminal prosecution, potentially resulting in imprisonment.
The number of FCA cases filed has increased significantly in recent years. Only time will tell whether the Brand Memorandum and the recent DOJ policy regarding the dismissal of FCA actions will reverse this trend.